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February 2015

Don't miss this historic event : The industry tributeto Dieter Bergman February 25 at IPC EXPO in San Diego.

Cisco Systems strong quarterly results are positive for companies in the networking giant's supply chain, such as Celestica, Flextronics International, and Amphenol according to RBC Capital Markets.

Taiwan-based supply chain companies are forecasting a better 2015 than 2014. Flexible circuit maker Flexium Interconnect expects sales this year will outpace those of 2014.  January sales of $55.2 million were up 60.6% January 2014.

Apple Watch, which will soon be widely available, has already made an impact on its production supply chain. Since Apple adopted SiP technology, PCB manufacturers who make substrates for Sip, such as Nanya PCB and Kinsus have shipped out over one million substrates in January. ASE, who has received OSAT (Out Sourced Assembly & Test) orders for SiP (System in a Pakage), has also benefited by the ramp up of Apple Watch.

Unimicron, Kinsus, Tripod, Compeq, Apex, and Chin Poon are among the many PCB manufacturers that plan to increase production by expanding new plants or purchasing new equipment. The results of this increase shall be seen in the second half of this year. Compeq's growth this year is expected to be mainly from new smart phone HDI orders.

The price of copper-clad laminate price in Greater China declined 3% in January and could drop another 4-5% in February bringing it to its lowest point in 5 years.  PCB fabricators are expected to resist any demands for price decreases as they claim that their prices are already "too low".

PCB and PCBA supply chain members in China 
believe that that pent up buying needs of the past 3 years will break out into hard equipment purchases in 2015.

We predict the biggest attendance in years at IPC APEX later this month. The fine technical program, a fine array of new products, special tribute to Dieter Bergman, will all serve to attract many foreign as well as domestic visitors. 

January 2015

This year is different. Rather than reflections and forecasts, it is starting with the memory of longtime colleague and friend Dieter Bergman. He did more than any other single person that I know to help the printed circuit board industry and its standards bearer, the IPC. He was consistent and persistent. He was a pioneer. He had an indomitable zest for life. There is a saying that a man is known by his enemies. Dieter was known for his accomplishments, his consistency, his selflessness, his tireless efforts to help build the industry and its standards - globally. He became an industry icon for the decades. He did this without creating a single enemy.*

*Note Rex Rozario, OBE's (Secretary General WECC, IPC and EIPC Board of Directors, and Chairman of Graphic PLC) and Peter Bigelow's (president of IMI and former member of the IPC Board of Directors) personal memories of Dieter on our comments page.

It is fitting that we all pause to reflect upon our time with Dieter and the good that he has wrought for so many around the world. It is proper that he and his memory receive the recognition that he did not seek. The IPC, for whom he toiled so long, is taking steps to ensure that will happen.

IPC APEX EXPO 2015 will recognize an IPC and industry icon, Dieter Bergman, during a tribute on Wednesday evening February 25 at the San Diego Convention Center. Dieter’s name will forever be synonymous with IPC as he leaves a legacy of accomplishments, friendships and lasting memories. During Dieter’s tribute, several IPC members will be honored with the IPC Dieter Bergman Fellow Award and will have the opportunity to bestow a Dieter Bergman Scholarship to the university or college of their choice.
The event ticket price of $25.00 will go toward the Dieter Bergman memorial scholarship fund.  "We hope you will join your colleagues in celebrating Dieter’s lifetime of achievement as this special event," says  IPC President Dr. John W. Mitchell

Times have certainly changed

Forty-Three years ago, when I was the Vice President of Business Development of Oxy Metal Finishing (Sel Rex, Udylite, Parker, et al), I was invited to speak at one of the first shows in Japan for the electronics industry. It was called INTERNEPCON JAPAN and focused on printed circuit manufacturing and electronic packaging. It was easy to plan one's time and find topics and exhibits of interest. Over the years specialized competing events developed, there as well as around the world. Then as markets and technology shifted and production began to concentrate to fewer and larger organizations, attendance began to slip. Trade organizations adapted and morphed into different profiles and areas of focus.

In Japan, INTERNEPCON became NEPCON JAPAN. To boost attendance, the show producers kept adding new concurrent events such as Electrotest, IC Packaging Expo, Automotive Component Processing Technology Expo, Wearable device Technology Expo, etc., to the point that there were 14 different areas of focus more than 2,000 exhibitors in this month's event. The attendance WAS up. But those from "our" industry were at a loss to cover the entire show, segment out what was applicable to today's and tomorrow's business while seeing items that just were of interest to them.

At the contained Printed Wiring Board Expo Oki Printed Circuits introduced its >100 layer advanced "super multilayer" rigid PCB, 7mm thick with trace widths of 0.095 mm as well as a 32Gbps high speed transmission board. Oki's Y. Shirakura stated that he would be visiting the U.S. in February seeking to form new representative relationships.

Japan's Masamitsu "Matt" Aoki has just completed updating his major charts: "Thin Type Printed Wiring Board And Their Application In Japan" version 25.0, and "Build-Up Type Printed Wiring Board And Their Application In Japan" version 15.0. Both of these detailed charts are copyrighted January, 2015. Aoki has also compiled a ranked list of the top 39 Taiwan printed circuit fabricators using data from the TPCA. Contact us if you wish a copy of the charts or the list which includes 2014 sales for each of the Taiwan companies.

Every so often I see an article or column that strikes a chord that should stir some discussion and asks a question for which there is no answer. Dan Beaulieu's January 24th "It's Only Common Sense" is one of those. Excerpts are posted on our Comments and Discussions page.

Will this put a damper on some of the electronics growth in 2015?

China’s economic growth slowed to 7.4% in 2014, downshifting to a level not seen in a quarter century and firmly marking the end of a high-growth heyday.  The slipping momentum in China, which reported economic growth of 7.7% in 2013, has reverberated around the world weakening an already soft global economy. While 7% growth would be the envy of most economies, Beijing says at least this level is needed to create enough jobs for China’s huge population.

The slowdown comes at a vulnerable time for the world economy. The Eurozone is at risk of a third recession in six years. Abenomics policies have failed to lift Japan out of stagnation. Output in many major of the emerging markets that provided  impetus for global growth over the past decade is slowing faster than expected. 

Economists see the slowdown as the prelude to an extended deceleration of growth. Leaders since mid-2014 have emphasized a “new normal” of slower growth.  How China addresses the slowdown matters. Reliance on real estate, construction and smokestack industries has reached its limits, as evidenced by rising debt and polluted skies over much of the country. source WSJ)

Sources state that Csun Manufacturing and Ampoc Far East will both report flat or slight growth in the first half of 2015 due to continued brisk orders for wet-process PCB manufacturing equipment, as PCB manufacturers upgrade production lines and expand capacity for HDI boards and IC substrates.

Chin-Poon Industrial reported consolidated revenues of NT$5.51 billion (US$172.96 million) for the fourth quarter of 2014, hitting a quarterly record for the second consecutive quarter.  Consolidated sales for all of 2014 were up 9.8% to $673 million. Chin-Poon continues to see its plants run at full utilization buoyed by strong demand for car electronics.

Do you remember the song that began, "I was born to wonder....?"

Well, I wonder what percent of flexible circuit production in greater China (and elsewhere) is dependent upon demand for Apple's iPhone, and what percent is dependent on all of its droid, windows and other smart phone competitors.

FOXCONN has become Mexico’s second largest manufacturing exporter. General Motors is the largest.

Market observers state that Taiwan-based firms such as Apex International, Nanya Printed Circuit Board, Tripod Technology, and Unitech Printed Circuit Board, will see sales from the automotive industry drive their revenue growth in 2015.

Digitimes Research predicts that global tablet shipments will drop 11.8% in 2015. Yet, Intel achieved its goal of shipping 40 million tablet APs in 2014 and for 2015, It raised its goal by 10% to 44 million units, to account for one third of the non-Apple tablet shipments in 2015.

Oki Printed Circuits has started production of HDI PCBs having a maximum board thickness of 3.5 mm (30 layers) to support next-generation 1,000-pin LSIs with a pin pitch of 0.35 mm. These PCBs are used for socket boards used in LSI function testing devices. The tight tolerance boards are made possible by Oki's newly developed FiTT method, which is capable of forming through vias of ultrafine diameters (finished diameter 0.10 mm), a feat not possible with existing build-up or through via methods. What made this possible are high-precision laminating technologies, which minimize layer-to-layer registration offsets to within 40 µm, and high-precision drilling technologies, which use systems for adjusting via hole positions down to the micron level and optimizes drill shape and drilling process steps. Oki states that the simplicity of the process allows production at low cost and short lead times.  It will exhibit this technology Tokyo this month at NEPCON JAPAN 2015.

Reverse engineering

Fremont California's test company Datest has introduced a new PCB reverse engineering service. With its new capability, Datest states that it can now rebuild board data from printed circuit boards (PCBs) and printed circuit board assemblies (PCBAs).

December 2014

What was unusual about the December 12 issue of Science (published weekly in New York)?

It had 30 pages devoted to a "Focus on China" which contained primarily Chinese university recruiting advertisements for a wide variety of research and teaching positions in China. They sought talents from "home and abroad". They offered positions of Dean and "Heads" for Schools of Science. They offered Professorships and Chairs. They sought "global high caliber talents." They called for "young and extraordinary" talents.

The December 29 fire at Tripod Technology's factory in Taoyuan, Taiwan, caused no major damage to the company. The company stated that it will have no impact on Tripod's production capacity as its main production base is located in Wuxi, China. The Taiwan operations account for less than 5% of its overall capacity. Tripod has reported net profits of $25.7 million for the third quarter of 2014, up 49.7% sequentially and 26.5% YOY. Tripod is now putting more emphasis on HDI boards and other product lines for automotive electronics, servers and networking equipment. The company is forecasting a profit increase of 5-10% in 2015.

A late December fire destroyed parts of Wurth Elektronik's PCB plant in Niedernhall,  Germany.

Is the link broken or just more convoluted?

There was a time when one could forecast levels of PCB manufacturing changes by rate-of-change charts for the semiconductor industry. These normally led board production shifts by 3 to 6 months. One must now wonder if that predictor is still valid as there are now 28 sub-segments of the IC industry as well as packaging changes that reduce board real estate. According to IHS Media in 2014 the overall market increase will be 9.7%. This is made up of a combined increase of about 20% by DRAM and flash memories with the balance of the IC market showing an advance 6.7%.  The fabrication of substrates portion of the interconnect industry has also become segmented. It has also shifted its manufacturing geographic base as fabricators continue to consolidate.    This continues to stress the supply chain that must gamble on where it spends its research dollars (not all "partnerships" work out well) for the best long term return. It pits funding for activities for large volume low cost (yet higher tech) products and processes against those designated for niches with smaller volumes and greater margins. 

That leaves the challenge of bringing products to bear in a company's specific defined buying public. One interesting result can be seen in  the publicity for next month's NEPCON Japan 2015 to be held at Tokyo Big Sight. It combines  6 "specialized exhibitions" while it collocates with the Wearable Expo, Automotive World, and Lighting Japan, also produced by Reed Exhibitions. The whole thing will total over 2,000 booths. It's going to be easy to get "lost" in the mélange!

Rogers' announcement  that it would acquire Arlon furthers our industry's forecasted continued consolidation throughout its supply chain. Kulicke and Soffa Industries, (K&S) will pay $98 million in cash for 100% of Assembléon B.V. It's also jersey swapping time with the transfer of ownership of Electropac in Manchester, New Hampshire from founder Ray Boissoneau to one of its employees and 2nd generation industry member Paul LaLiberte. The company has been renamed Valhalla Circuits. Note the reminiscences by Don Walsh, Uyemura on our Comments & Discussions page.

One of the most likely effects of consolidation will be a new look at system or full line supply and service offerings by major suppliers reversing the trend of the past few decades of just focusing solely or primarily on major profit contributing product offerings. It will also push a trend to strengthen top line numbers to further entrench company survival opportunities as well as spin off new products and systems in the future. This will ultimately strengthen total dollars at the bottom line if managed well. It will also "force" smaller companies or individual inventors to sell or license earlier in order to gain any significant market shares. It will also increase the drive to manufacture product segments (directly or with "partners") geographically closer to the major targeted markets.

IPC President Dr. John Mitchell stated in a video interview at the joint IPC/HKPCA event early this month that one could, "Never stay comfortable in this industry" as he spoke about future training and education for our member companies and their employees. I believe that to mean that when you stop improving you are no longer good  and perhaps not even capable of competing or advancing in the future. I also believe that the furthering of one's skills must be beyond just the technical aspect, but must also include a broader base of knowledge that embraces business, marketing, and economic factors, in order to understand and participate in international as well as domestic opportunities created by shifts in socio-economic circumstances as well as political situations.

Verizon is forecasted to sell 3 million of its own-brand 4G tablet, the new Ellipsis 8, manufactured by Quanta Computer, in 2015, up from nearly 2+ million units of the Ellipsis 7 in 2014.

Taiwan’s Allied Circuit, BoardTek Electronics and Gold Circuit Electronics (GCE) are all running their production lines in Taiwan and China at full capacity, buoyed by strong demand for multi-layer PCBs, according to the DigiTimes. The three companies are expected to report record high revenues for the fourth quarter of 2014, the sources indicated.
GCE saw its November sales stay high. The company announced consolidated revenues of NT$1.88 billion (US$60.1 million) for November 2014, down 1.8% from the record $61.7 million posted for the previous month. BoardTek generated consolidated sales of $24.6 million in November 2014, hitting a record high for the third consecutive month, while Allied Circuit's November sales came to $5.1 million. GCE also makes PCBs for notebook computers.

TTM’s EBITDA for the third quarter of 2014 was $43.6 million, or 12.6 percent of net sales, compared to adjusted EBITDA of $32.8 million, or 11.0 percent of net sales, for the second quarter of 2014 and $42.3 million, or 12.5 percent of net sales, for the third quarter of 2013.
"As expected, we grew revenue and operating income on a sequential basis in the third quarter. We experienced solid demand across all of our end markets, led by a strong revenue ramp in cellular phones and better than expected sales in our networking/communications end market," said Tom Edman, CEO of TTM.

Of the than 500+ exhibitors more than 100 were new participants that showed their wares in 2 halls at the HKPCA/IPC APEX joint event in Shenzhen. Attendance on the first day was strong, but slowed a bit on the second. The show was organized differently this year with all of the materials and specialty chemical suppliers in Hall 2. This included a plethora of "copy-cat" products with new names whose opening pitch often seemed to be, "My boss came from ABC Company or XYZ Corporation and our price is cheapest." These often appeared to have no service policies or staff. One well-established smaller specialty chemical supplier, Cerambus, stated that the net result of all these new entries was that profits fell as revenue nearly doubled this year.

In general, major supply chain members stated that the 3rd quarter was "OK" (one said that it equaled the first two quarters) and that the outlook for 2015 was for a modest improvement - depending on global economic behavior and government currency controls.

A result of the increased flex and flex-rigid demand was the appearance of a number of new suppliers of domestic reel-to-reel processing equipment. Chinese builders of reflow ovens were now reported to exceed twenty.

To me, Orbotech’s NuvogoTM direct imaging system was the star of the exhibition. It stood far above the many direct imaging systems (LED, LDI, and others) on display. It was introduced to the Asian market at the TPCA at Taipei in October. According to Orbotech Pacific President Gaby Waisman, its impressive speed of up to 7,000 panels/day for an in-line system is based upon the company’s new MultiWave Laser TechnologyTM which exposes ALL photoresists simultaneously with a broad band of UV light including I-line and G-line energy. The company says that the 800’s speed along with a price in the range that of its previous LDI systems and a 20% lower service contract costs can lower total ownership costs by up to 40%. The system is capable of line and space resolution of 18mm with registration accuracy down to 10mm. On December 3 Red Board Ltd. of China announced that it had ordered a NuvogoTM 800 system. This sale was Orbotech’s 1,000th DI system sale.

It is obvious to me that direct imaging will make photomasks a "thing of the past" within 10 years for high volume imaging of PWBs. One must speculate if ink jet printing technology will advance enough to find a place for short run in smaller companies  or niche applications during this period.

J. Philip Plonski, Managing Partner at Prismark Partners pointed out the opposing forces that challenge future advances in his presentation "Electronics Industry Dynamics and PCB Changes" at the event's market conference. Namely: The a shift to an environment that demands creative low cost, high performance solutions serving high volume consumer-facing segments and the rise of fabless IC, IC foundry, IC OSAT, and EMS/ODM manufacturers, changing where manufacturing innovation is taking place and increasing reliance on suppliers of tools, processes, and materials.  - Once again, I wonder who will pay the bill and who will reap the rewards. Who will take the necessary risks? How much will time to market affect the new advances? No one seems to be facing or discussing the necessary key to make all this work: TRUST*. There seems to be a profound lack of it amongst various members of the manufacturing/development/supply chain communities. There is even a fear of introducing new products to markets in China where ownership is primarily domestic.

*See Comments & Discussion page for remarks by Dr. J. Lee Parker.

WKK and ESI announced a new multi-year agreement at the show for WKK to represent ESI's UV laser drilling systems in greater China. Dr. Michael Darwin, ESI Vice President, stated that the company, which has been making and selling these systems for 20 years, will announce several "next generation" advances for HDI hole formation at the CPCA show this coming Spring.

Foxconn, leading the charge to automation in the interconnect industry in China, has installed several hundred thousand robots in its march to have one million operating in a few years for assembling such products as the iPhone. However, the robots, derived from those in the automotive industry, appear to still need some "refinements" to handle and position the small components used in smart phones and tablets.

Schmid, celebrating its 150th anniversary, showed a new transport system with live current available to conduct electrical tests as boards were moved from one station to another.

On the eve of the industry's largest PWB show I have begun to reflect on what the American ex-pats that I will meet here are doing for their Greater China employers. I wonder what  they could not have done in the States and the reasons why. Now the game has changed. Labor costs are up. Automation is advancing. Business continues to consolidate rapidly as "blue chips" have vanished. Others are in jeopardy. Those remaining are few and far between. No matter what the stated reasons of mergers, consolidations usually result in a bunch of spin-offs, reorganizations, lay-offs, and facility closures.

One thing is certain. The days when Asian companies would buy old, tired American facilities and fix them up as a potential method of market entry are long gone. They have learned that it is better to invest in the newest technologies at the outset and not waste their funds patching and fixing near obsolete operations. This could be one of the motivations for some American corporations to design and install new state-of-the-art automated and "green" captive PWB operations. One such venture is even predicting a bare board cost reduction of greater than 30% over his currently outsourced panels - as China's economy inched ahead of that of the United States to become "number one" in the world.